Payments for ecosystem services can promote healthier ecosystems and fairer deals for smallholders, but who will pay for these schemes, asks an article in EcoBusiness.

There are many examples (some given in the article) of where smallholder farmers and communities are able to sustain their livelihoods while having minimal impact on forests and other natural ecosystems. These farmers are practicing agroforestry, reforesting areas, fencing in livestock and not cutting down trees. This is having many environmental benefits such as cleaner water, more biodiverse habitats and carbon storage.

However, ongoing funding to encourage farmers to adopt or continue with such practices remains an issue. PES schemes are complex undertakings. They involve people, governments or business being willing to pay because they gain from the changes farmers make to their land use practices. Such schemes need to be fair, with meaningful incentives provided to farmers for changing their practices.

While funding for biodiversity and ecosystem services in 2010 is estimated to have been over US $50 billion, most of the action comes from the bottom-up.

“Up front commitments from farmers need to be backed with longer-term funding,” says the article. This must incorporate flexibility so that farmers can overcome uncertainty and not threaten local food security.

The article suggests that successful strategies to help smallholder and community projects reach international carbon markets include:

• Providing access to creditable standards to increase trust along market chain, such as Plan Vivo Standard, the Verified Carbon Standard (VCS) or the Climate, Community and Biodiversity Alliance (CCBA) Standard; and
• Placing greater focus on the co-benefits of such programs to help farmers fetch better prices in ecosystem-friendly products.

Read the full story: Who will pay for ecosystem services?